Bikita Minerals is offering many of its workers retrenchment packages as the lithium producer takes a heavy battering from coronavirus-induced market turbulence and the country’s macro-economic instability, TellZim has learnt.
The company operates a 15km2 mining lease area, producing mainly lithium-bearing petalite for export mostly to China, sustaining hundreds of workers directly and hundreds more people through downstream industries.
On a smaller scale, Bikita Minerals also processes tantalite from rocks known as lepidolite, but the company says it has decided to suspend this operation for such reasons as the processing plant’s size and efficiency that the company says are too limited to continue running it profitably.
Lithium and its compounds have many industrial applications including production of heat resistant ceramics, lithium lubricants, lithium batteries and lithium-ion batteries.
However, the global market has faced immense disruption as a result of the worldwide lockdown which has affected at least a third of the global population in recent months.
Commodity prices have plummeted in light of depressed demand from major economies and significant industry players like Australia, China and Germany.
In a statement released in March, the company lamented that ‘prevailing macro-economic challenges, a dip in the price of certain lithium-based ores, and a global health scare have had a knock-on effect on the performance of Bikita Minerals as sales volumes have gone down by nearly 50 percent in 2020.’
But even before the coronavirus outbreak, the company had been taking a battering from the country’s debilitating economic crisis, having to run costly massive diesel generators for prolonged periods of electricity load-shedding regimes.
There is palpable fear that any further disruption of operations at Bikita Minerals, which is one of the three major employers in Masvingo province, would have far-reaching economic implications.
Despite its precarious financial situation, the company has maintained an impressive level of social responsibility – donating $50 000 to the Masvingo Covid-19 Provincial Taskforce in April.
Close sources say so far, the company has already terminated short-term contracts for hundreds of employees while those on full-time contracts have been advised to take the voluntary retrenchment offers that the company has reportedly dangled to ensure a safer landing for them should things go for a head as is expected.
Bikita Minerals general manager David Mwanza, when asked if it was true that the company planned mass lay-offs, could only say it was partly true without elaborating.
He referred further questions to the company’s Harare-based public relations manager Precious Chitapi who, in e-mailed responses to TellZim News, said the company was only planning to retire those that have reached the age of 60.
“Bikita Minerals is not closing. The mine is not laying-off its employees. Only the over 60 are retiring with due notice at the end of June 2020. The market is waking up slowly from the Covid-19 lockdown. Just to keep you informed, Bikita Minerals is still selling stones.
We have customers buying in the normal way, but it is in small batches because of the market condition in the world. We are also milling products for a few customers that was prepaid,” she said.
However, in the March statement, the company admits that it could only ‘minimise job losses’, adding that many workers on contract had already been affected.
“The mine currently has about 250 permanent employees, 300 contract workers and 500 contractors. Over the past two months, the number of contractors has been shrunk significantly, an exercise which will be supplemented by normal attrition and a moratorium on the hiring of new staff,” reads part of the statement.
Other sources that spoke on condition of anonymity said the miner was likely to either look for fresh foreign capital, which would not be easy post-lockdown considering the country’s unattractive risk premium in the eyes of investors, or dispose of its assets.
“As would be expected anywhere, the company is putting up a brave face but things are not OK. All monthly contracts have been stopped but the final position will only be clear after lockdown.
As of now, only essential maintenance staff members are on standby. The company’s options are few, that is if there are any,” said one source.
Other sources said there were still significant mineral deposits in the company’s lease area to merit new investment and expansion, but diminished activity in the world economy coupled with unstable fundamentals in the local economy was making it extremely difficult to sustain current operations.